Since taking over AbbVie in 2013, in addition to ensuring a smooth transition from Abbott, there is also a huge crisis looming in front of the Abbott veteran Gonzalez, that is, how to deal with the subsequent arrival of the big product Humero patent cliff, and how not to fall into the abyss in the cliff and the temple. What kind of footnotes has this "generation" CEO left for the continuous attack of AbbVie in the past 10 years?
Written by |Shi Ruoxiao Xiaoqin.
Edit|彡氜.
Not long ago, AbbVie announced its 2023 financial results. Due to the expiration of Humira's patents, revenue and profit declined. Although it was expected, it is still inevitable that people will be panicked after it actually happens.
People's minds have changed, and they need to be appeased by strong people. However, the strongman was old and had to leave. According to the latest news, Richard AGonzalez will retire in July of this year, and the CEO role will be replaced by Robert A., the current president and chief operating officerMichael takes over.
AbbVie spun off from Abbott in 2013 and has been CEO ever since.
The first generation of leaders played a foundational role in the development of the company, and even after retirement, their strategic planning will still affect the operation of the enterprise for years to come. Looking back on Gonzalez's work as CEO today, it can be described as "preparing for a rainy day", that is, preparing in advance for the "patent cliff" around Humira. The acquisitions of Pharmacyclics, Allergan, Immunogen, and Cerevel are all externalized reflections of this core.
And at the same time of "buying, buying, buying", AbbVie's own business has not been left behind. In more than a decade, the company's market capitalization has grown from more than $18 billion at the beginning to more than $300 billion today, which is undoubtedly the best footnote to the CEO level.
Winter has arrived, but the hero is twilight, and he can no longer take the helm. And with Richard Gonzalez's retirement in July this year, the ten-year struggle period belonging to AbbVie's attack has also come to an end for the time being. Now standing at the time point of the alternation of the old and the new, people can't help but wonder: can this "young" company successfully survive the crisis and move to the next stage? Is it time to answer?
AbbVie flying solo: Paving the way with a "ten-year covenant".
Combing the list of global pharmaceutical companies in terms of market value in 2024, among the top 10 companies, AbbVie has the shortest history, and it will only be 11 years old.
But AbbVie has a long history behind it. Under the layout of Abbott's former CEO Miles White, in January 2013, on the occasion of the 125th anniversary of the establishment of Abbott Laboratories, AbbVie officially listed on the New York Stock Exchange with biopharmaceutical assets with R&D as the core.
The logic behind this split is simple: professional people do professional things. As the biopharmaceutical industry became more and more prosperous, White keenly found that there was a significant difference in the valuation intention of Abbott's traditional business and innovative drugs in the capital market, so he decided to divide the company into two, the traditional business still belongs to Abbott, and the innovative drug business belongs to the newly established AbbVie, focusing on four directions: immunity, oncology, neurodegenerative diseases, and viruses.
At that time, the most important asset in Abbott's hands was Humira, the "King of Medicine". In accordance with White's strategic plan, Abbott handed over the rights to Humira to AbbVie in 2013.
The attitude of the capital market towards this decision is directly reflected in the market value of the company. AbbVie was worth just $18 billion when it went public, but it surpassed Abbott a few months later.
It can be said that AbbVie is a rich second generation born with a golden spoon, who only needs to enjoy dividends and show off in the wind, but is exempt from the heavy burden of history. However, it seems that the best disk is good, but it is not easy for the helm.
The founding CEO designated by White for AbbVie was none other than Richard Gonzalez, then executive vice president of drug development for Abbott Sr. This choice is based on the fact that at the helm of such a "rich second-generation" company, Gonzalez, as an old man who has been working at Abbott for more than 30 years, is more able to be prepared for danger in times of peace and see the crisis behind the scenery.
In another little-known episode, Gonzalez, 53, retired once in 2007 after being diagnosed with throat cancer, and returned to work after recovery. Having experienced the ups and downs of life, he is undoubtedly the best candidate for the helm of the enterprise.
AbbVie's crisis is precisely the over-reliance on a single drug. At its peak, Humira accounted for almost 60% of AbbVie's total sales. Without substitute support, once entering the patent cliff, it will be a devastating blow to companies that are accustomed to path dependence.
As early as the beginning of his tenure, Gonzalez knew a point in time: Humira's U.S. patent would expire in 2023. Although there are many technical means to postpone the node, in general, the cycle will not change.
In other words, there is no more and no less time left for him, exactly ten years.
Ten years is the average time for a new drug to go from R&D to market. When he took office, Gonzalez began a race against time, and his task was heavy: while maintaining growth, he must also find a replacement for Humira for AbbVie, and build a research and development platform, establish a BD and M&A mechanism, and give the company the ability to self-sustain hematopoietic iteration.
The opportunities and crises in front of Gonzalez urgently require him to respond with thunderous means. Over the past ten years, he has gradually identified two paths for AbbVie's development, and has steadily advanced it. On the one hand, we will strive to expand the pipeline of new products, create "rising stars" in the fields of autoimmunity, tumors and nerves, and steadily increase R&D investment; On the other hand, the usual "mergers and acquisitions" strategy of big pharmaceutical companies is also more vividly reflected, and a number of blockbuster acquisitions during this period have attracted attention in the industry.
This "ten-year covenant" may now be put to the test.
What is the effect of R&D and acquisition?
Finding the next "medicine king" has always been AbbVie's main quest.
In terms of self-development, continuous and stable growth in R&D investment has always been the engine that supports the development of a pharmaceutical company, and AbbVie is no exception, continuing to increase R&D investment. From a ten-year perspective, since its establishment in 2013, AbbVie's R&D investment has increased from the initial $2.8 billion to 76 in 20237.5 billion US dollars, and the cumulative R&D investment over the years has exceeded 50 billion US dollars.
In particular, it is worth mentioning that in terms of self-development, the JAK1 inhibitor Rinoq (upadatinib) was approved for marketing in August 2019, becoming another successor of AbbVie's "drug king".
However, looking back over the decade, AbbVie's bigger move is to expand its pipeline through continued acquisitions. Looking at AbbVie's ten-year history of mergers and acquisitions, many of them have attracted the attention of the industry. It's just that ten years is too short for the pharmaceutical industry, and the quality of a series of mergers and acquisitions during the period cannot be judged at present.
In 2015, AbbVie acquired PharmacyClics for $21 billion and acquired a 50% stake in ibruvica, as the world's first approved BTK inhibitor, ibrutinib quickly became AbbVie's second largest blockbuster drug after Humira, generating billions of dollars in sales every year.
However, the good times did not last long, and soon the BTK track ushered in extremely fierce competition, resulting in a significant loss of market share of ibrutinib. In head-to-head experiments, it was also surpassed by BeiGene's zanubrutinib, with sales of 45 in 2022$6.8 billion, down 15.5 billion year-on-year5%。
Today, it is also an indisputable fact that the sales of this product are under pressure. Although tumors were not AbbVie's strong point in the past, AbbVie has been investing heavily in the field of oncology in recent years, especially solid tumors, and its technical direction is especially preferred in the field of ADC. It has more than 20 major ADC pipelines, of which 40% are imported from outside, but many of them are currently inactive.
As early as 2016, AbbVie also had a heel in ADC. At that time, AbbVie acquired the same high-hoped, Stemcentrx, whose core product is the ADC drug ROVA-T, but the development of ROVA-T ultimately failed, and AbbVie also paid a heavy price, and the impairment loss of intangible assets alone was provided for $4 billion in 2019. In 2023, AbbVie will once again lose a son and invest heavily in the acquisition of Immunogen, a leading ADC company, which shows its determination in this field.
Also much talked about in the industry is AbbVie's acquisition of Allergan. In 2019, AbbVie acquired Allergan in a cash and ** transaction with an equity value of approximately $63 billion, thus obtaining a series of medical aesthetic product portfolios, covering facial aesthetics, body contouring, plastic surgery, ** care and other fields, among which the blockbuster product is Botox (BOTOX), a botulinum toxin type A product for injection, which once accounted for 86% of the global botulinum toxin market share.
However, this merger and acquisition has attracted a lot of doubts, and even caused AbbVie's stock price to be ** for a while. After all, the reason why White decided to spin off AbbVie from Abbott was to concentrate on the innovative drug industry. But now AbbVie has turned its attention to medical aesthetics, and there is almost no overlap between the two important product lines, which inevitably raises questions about the coherence of its strategy. However, the acquisition significantly expands AbbVie, at least financially, from a top 10 to a top 5 in terms of revenue.
In the past 2023, it can still be seen that AbbVie is steadily moving towards the existing path, maintaining the past pace of acquisitions, and at the same time clarifying one of the key points of attack: ADC and neurological fields.
For example, at the end of 2023, AbbVie successively acquired two biotechs, first acquired Immunogen for $10.1 billion at the end of November and obtained its core asset somituximab; A week later, it acquired Cerevel Therapeutics for $8.7 billion, which has a leading pipeline in neurological and psychiatric disorders, including psychiatric disorders, Parkinson's disease (PD) and mood disorders. AbbVie's intention is clear, and it has invested heavily in the acquisition of two companies to strengthen its competitiveness in the oncology and neuroscience tracks, respectively.
In the past ten years, AbbVie has grown almost "savagely", frequently acquired, cooperated, and attacked everywhere, and every time it made a move, it attracted market attention. Although the acquisitions have been successful and have failed, on the whole, most of them have laid the foundation for AbbVie's path to becoming a giant today.
How is a tough battle with no way out?
The critical juncture of this decade is fast approaching.
In 2023, the time to verify the effectiveness of AbbVie's ten-year layout has come. Along the way, under the leadership of the 30-year Abbott veteran, AbbVie, which was once defined as "small but beautiful", gradually faded the label, and also carried out an offensive battle in terms of revenue and market capitalization. In the past year, according to the statistics of e-drug managers, the market value has also risen by nearly 50 billion US dollars, becoming one of the rare "rising stocks" among the most valuable pharmaceutical companies.
Despite the preparation, AbbVie was still unable to escape the impact of Humiral's declining performance. In 2023, Humira lost its exclusivity in the U.S. market and has since faced competition from U.S. biosimilar products.
It can also be glimpsed from the latest disclosure of the 2023 financial report. AbbVie's revenue and net profit both declined, especially the net profit was cut in half. Among them, the revenue was 5431.8 billion US dollars, down 64%；Achieved a net profit of 486.3 billion US dollars, down 58 percent year-on-year91%。But looking at Humira, the star product, the revenue will fall by 32% in 20232% to 1440.4 billion US dollars.
However, due to the layout of the previous decade, a good development trend is that the proportion of Humira's revenue in AbbVie is declining year by year. From the large single products that directly accounted for more than 50% in previous years, to the past three years, it has declined significantly year by year. For example, in 2021, Humira sales accounted for 36% of AbbVie's total revenue82%；In the same period of 2022, it was 366%, and only about 27% in 2023, the change is becoming more and more obvious.
Regarding the financial report, Gonzalez bluntly said that he is ready to completely eliminate the impact of Humira patent expiration in 2024 and achieve operating income growth. Implicit in this statement is the expectation that AbbVie will return to strong growth in 2025 and achieve a high-single-digit compound annual growth rate by the end of 2030.
Today, the field of AbbVie disease has expanded from immunology to immunology, oncology, neuroscience, ophthalmology, aesthetics and other fields.
Among the immune combination drugs, the "immune twin stars" Skyrizi (risankizumab, risazumab) and Rinvoq (upadatinib) after Humira have also gradually taken over the baton, and these two drugs are crucial to AbbVie's stability as an autoimmune giant. These are indeed two potential products. According to Evaluate Pharma**, Skyrizi and Swiss' total sales will reach $15.8 billion by 2026. AbbVie expects peak sales of the two products to surpass Humira's peak revenue of $21 billion by 2027.
Looking at the 2023 performance alone, both new star products have maintained a growth rate of 50%. Skyrizi net income increased by 51% in 2023 and Swiss' net income increased by 58%.
In the field of ophthalmic genes, AbbVie also has a layout. Vuity was approved by the FDA for presbyopia in October 2021, becoming the first eye drop specifically for presbyopia. In September of the same year, AbbVie and RegenxBio entered into a collaboration to jointly develop and commercialize RGX-314, an ophthalmic genetic** drug, for the treatment of wet age-related macular degeneration (WAMD), diabetic retinopathy (DR) and other chronic retinal diseases.
After combing through all this, let's go back and study the question that is often tortured by the industry: "The ten-year covenant" has arrived, can AbbVie, who left Humira behind, move to the next stage?
No one can ** the future, but the known fact is that after the independent separation in 2013, AbbVie has completely faded the impetuousness and youthfulness of the rich second generation after ten years of tempering, and has entered middle age. The founder behind him waved his hand away, not taking a cloud with him.
Reference: "The Success Code of Pharmaceutical Giants - Small Stories, Big Strategies, Interpreting the Secrets Behind Multinational Pharmaceutical Companies for You".